From the TUC

Spending cuts will hit the poorest

12 Sep 2010, by Guest in Economics, Politics, Public services

Only a few weeks ago, the Government was seriously embarrassed by IFS research showing that the changes to tax and benefits bear down hardest on the poor. But so far no-one has yet worked out the impact of spending cuts on different income groups.

It’s common sense that the poor use public transport more than the rich, and pensioners use the NHS more than the young. But no-one has yet put all the data together to work out the precise impact of the big cuts planned by the government.

Today we launch a substantial independent report that does exactly this.

It is based on the most thorough analysis of who benefits from UK public spending ever carried out. It means that we can use what the Government has said about its spending plans over the next three years to work out how they will hit different groups.

What we can now definitively say is that the spending cuts will make the poll tax look like something dreamed up by Robin Hood.

The impact of spending cuts

This graph shows the likely impact of the planned cuts on each ten per cent band of earners.

The poorest ten per cent are set to suffer from cuts equal to 20p for every pound of their income, while the richest ten per cent suffer from a cut of less than one and half pence in their standard of living.

In other words the poorest ten per cent lose more than thirteen times as much as the richest ten per cent. Right across the income bands: the poorer you are, the more you lose.

Coalition ministers say their policies are progressive. They have promised that they will protect the vulnerable, not increase inequality and will not open up a new north/south divide.

Yet today’s figures show exactly the opposite. This is classic doublethink. They say progressive, but these cuts will make the poll tax look as if it was dreamed up by Robin Hood.

Each day it becomes more clear that there are alternative ways to drive down the deficit. These deep cuts not only threaten services, but risk economic recovery.

You do not need to deny the deficit to see that there are practical alternative ways of reducing it.

There is no need for such a rapid timetable. There could be a much greater role for tax increases fairly targeted on those with the broadest shoulders; and there could be much more emphasis on investment to stimulate greener growth.

The only conclusion is that the government is making a political choice, not following economic necessity.

Ministers are following policies deliberately designed to make Britain a far more unequal society. Those who did least to cause the crash pay the most, and those at the top face no more than demands for small change.

But voters last May did not vote for a radical and permanent cutback in the scale and scope of public services.

The poll tax was defeated when the decent majority stood up and said no. It offended the deep sense of fairness that we share in this country across party divides.

The cuts have only just started to bite. When their full extent becomes clear, I know the country will join with us in saying ‘no’ once again to policies that are so eye-wateringly unfair.

8 Responses to Spending cuts will hit the poorest

  1. Georges
    Sep 12th 2010, 4:22 pm

    Brendan,

    No cuts in the US, quite the opposite. Per the TUC thesis, poverty should be dropping there, right?

    The number of people in the U.S. who are in poverty is on track for a record increase on President Barack Obama’s watch, with the ranks of working-age poor approaching 1960s levels that led to the national war on poverty.

    http://news.yahoo.com/s/ap/20100911/ap_on_bi_ge/us_poverty_in_america

    Georges

  2. Christina
    Sep 12th 2010, 6:19 pm

    Georges,

    What are you talking about? There has been massive cuts in the US. Teachers have been laid off at an alarming rate, and there has been cuts in healthcare for the poor and for children in some states. Especially my state, Arizona. Not only that, but the Republican minority in the Senate has been blocking extending umemployment benefits.

    http://www.huffingtonpost.com/2010/08/06/the-harshest-state-budget_n_673064.html

    http://www.nytimes.com/2010/03/19/health/policy/19arizona.html

    http://www.medicalnewstoday.com/articles/179127.php

    http://money.cnn.com/2010/08/20/news/economy/schools_teachers_budgets/index.htm

    http://www.usatoday.com/money/economy/employment/2010-07-19-obama-blast-gop-jobless_N.htm

  3. Georges
    Sep 12th 2010, 9:05 pm

    Christina,

    The post and discussion is about national-level spending (UK and/or US). As a citizen of Arizona do you not have the option of moving to another state?

    Unemployment benefit extension is the only “cut” at the national-level? What about the US stimulus plan, bank bailouts, auto bailouts, etc? All of this spending combined was less than an extension of unemployment benefits? Unemployment benefits which were actually passed, not blocked:

    http://news.yahoo.com/s/ap/us_unemployment_benefits

    As it relates to supposed healthcare cuts, shocking, we were led to believe that Obamacare solved all ills, no?

    Georges

  4. Christina
    Sep 13th 2010, 12:31 am

    SCHIP (or children’s healthcare) was a provision signed into law that is separate from the Affordable Care Act (it was also created in 1997). Obama did sign a bill that would expand SCHIP, however that did not prevent individual states from cutting it (and in my states case, completely).

    The US stimulus, the auto bailout, and the bank bailout are working (even the Republican Senate minority leader says so about the latter), despite what you may be hearing http://www.csmonitor.com/USA/Politics/2010/0730/Obama-Detroit-auto-bailout-was-unpopular-but-it-worked
    http://www.nytimes.com/2010/07/30/business/economy/30autos.html
    http://www.politico.com/news/stories/1009/27904.html
    http://www.marketwatch.com/story/the-bailouts-worked-and-thats-the-problem-2010-04-13

    Admittedly, though, it’s not as good as we’d like it to be. It looks like the mortgage/credit market is doing poorly, and the unemployment numbers are dismal. Here in the US, cuts should be made (defense spending, subsidies to corn, etc.) but cuts that affect the poor would be disastrous. My .02 cents.

    PS- Can you name any state in the US that increased their budget or kept it at the same level before the recession, rather than cut it? I can’t.

  5. Gary
    Sep 13th 2010, 8:21 am

    I have always advocated a more balanced approach to solving the huge UK government debt problem.

    The sensible strategy would be to focus equally on taxation, and capital taxes in particular, as well as cuts in public expenditure.

    Cuts in public expenditure is often the easy choice as it affects the poorest in Society and this sector has no effective voice.

    Lets not forget the many people made huge sums of money from the excesses of the bankers. Typically they profited from property, property speculation, buy to lets, leveraged company investments etc. Surely now is the time for these people to give something back to Society. The taxation system has been very charitable to them so far.

    The main problem is that this sector of Society have a very effective voice in the media and as soon as there is the slightest suggestion that they might be affected by any increase in taxation, they bleat like mad.

    Somehow the weaker sectors of Society need to gain a voice and present their case effectively with determination!

  6. DAVID COOK
    Sep 13th 2010, 8:45 am

    with all the cut backs job losses andsavings the gov are doing what is the one thing that has an increase.
    I am not a racist and not talking about the money sent to the flood victims in Pakistan, what i am saying is what other country borrows money to keep the country afloat then gives it away to other countrys in foriegn aid. Last year we gave away 9 BILLION in aid which will be increased this year at the sacrifice of british jobs.
    money off the tax payer then sacked. STOP THE AID TILL WE FIX OUR OWN PROBLEMS

  7. joe
    Sep 13th 2010, 1:22 pm

    means testing and time limiting sickness benefits.

    it is estimated that 800,000 people would lose sickness benefits immidetely if they have a working partner earning £150.00 pw or more leaving many unable to pay their morgage, pay bills, or eat.

    a person who had payed ni for many years would see this benefit time limited to proposed 6 months.

    these plans will increase homeleness and poverty amongst those sick and disabled who through no fault of their own are unable to work.

    shameful

  8. Tom Paterson
    Sep 13th 2010, 1:40 pm

    Job cuts!

    Let’s start with with Members of Parliament who are not properly trained or have the right experience for the job.

    Can someone explain to me how anyone from a privilidged background who went to public school and possibly “Oxbridge” has even the slightest idea of what is like to be born in an area that lacks manufacturing industry and jobs. How have their background and education equiped them to know what to do to improve the lot of the poor in this country. It’s reminiscent of “no bread – let them eat cake!